JD.com (JD_9618.HK) & JD Logistics (2618.HK)_ 3Q24 review_ Record profits with JD Logistics a bright spot from scale benefits; maintain Buy JD_JDL; Neutral on Dada

Summary of JD.com and JD Logistics 3Q24 Earnings Call Company Overview - Companies Involved: JD.com (JD/9618.HK) and JD Logistics (2618.HK) [2][6] Key Financial Highlights - 3Q24 Revenue Growth: JD.com reported a revenue growth of +5% year-over-year, while JD Logistics achieved +7% year-over-year [2][3] - Net Profit Growth: JD.com’s net profit increased by +24% year-over-year, and JD Logistics saw a remarkable +205% year-over-year increase [2][3] - Profit Forecasts: FY24-26E profit forecasts have been lifted due to strong performance [2][3] Operational Insights - JD Logistics Performance: Achieved record profitability in a traditionally low season, driven by economies of scale and operational efficiency. External customers contributed over 70% of revenues [2][6] - EBIT Margin Expectations: Management raised long-term expectations for JD Group's adjusted EBIT margin to high-single digits from mid-to-high single digits [2][6] Revenue and Growth Projections - JD Retail Growth: Expected revenue growth of 6% for 4Q24E and 5% for FY25E, supported by strong general merchandise growth [3][7] - JD Logistics Revenue Growth: Revised revenue growth estimates to 9% for FY24, 8% for FY25, and 7% for FY26 [2][6] Margin Analysis - JD Retail EBIT Margin: Maintained at 5.2%, flat year-over-year [6][18] - JD Logistics Net Profit Margin: Increased to 5.8% due to improved operational efficiency [6][18] Shareholder Returns - Share Buybacks: JD.com repurchased US$390 million worth of shares in 3Q24, with a total of 8.1% of shares repurchased in 9M24 [8][9] - Dividend Commitment: A US$1.2 billion dividend is planned for April 2024, alongside a new US$5.0 billion share repurchase program [8][9] Risks and Challenges - JD Group Risks: Increased competition in China's eCommerce market, potential slowdown in online GMV, and fluctuations in JD Retail margins [15] - JD Logistics Risks: High revenue dependency on JD Group and concentration in a few sectors [15] Valuation and Investment Outlook - Target Prices: Maintain Buy rating on JD.com with a 12-month target price of US$46/HK$181, and on JD Logistics with a target price of HK$17.8 [9][21] - Profit Forecast Adjustments: Adjusted JD Group's net profit estimates by 0-2% and JD Logistics by 11%-28% for 2024-26E [9][18] Conclusion - JD.com and JD Logistics demonstrated strong financial performance in 3Q24, with significant profit growth and positive operational metrics. The companies are well-positioned for future growth, although they face competitive and operational challenges in the evolving eCommerce landscape.